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On June $30,2017,$ Waterway Company issued $12\%$ bonds with a par value of $$800,000$ due in $20$ years. They were issued at $98$ and were callable at $104$ at any date after June $30,2025.$ Because of lower interest rates and a significant change in the company's credit rating, it was decided to call the entire issue on June $30,2026,$ and to issue new bonds. New $10\%$ bonds were sold in the amount of $$1,040,000$ at $102$ ; they mature in $20$ years. Waterway Company uses straight$-$line amortization. Interest payment dates are December $31$ and June $30.$

$($a$)$ Prepare journal entries to record the redemption of the old issue and the sale of the new issue on June $30,2026.$

$($b$)$ Prepare the entry required on December $31,2026,$ to record the payment of the first $6$ months' interest and the amortization of premium on the bonds.

$($If no entry is required, select $"$No Entry" for the account titles and enter O for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually. List all debit entries before credit entries.$)$

No$.$

Date

Account Titles and Explanation

Debit

Credit

$($a$)$